Merck to Boost Oncology Pipeline With $6.7B Terns Buyout, Stock Up

Merck MRK announced that it has entered into a definitive agreement to acquire California-based cancer biotech, Terns Pharmaceuticals TERN, for $53.00 per share in cash or an estimated equity value of $6.7 billion.

The offer values the deal at about $5.7 billion after adjusting for cash.

Following the announcement of the acquisition, shares of Merck were up 2.6%. Terns' stock gained 5.7% yesterday.

Year to date, shares of Merck have risen 13.4% against the industry’s decrease of 4.9%.

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Shares of Terns have rallied 30.8% so far this year against the industry’s decrease of 0.6%.

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TERN Acquisition Can Boost Merck’s Cancer Pipeline

The impending acquisition will add Terns’ lead candidate, TERN-701, an investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor, to Merck’s hematology/cancer pipeline. The candidate is currently being evaluated in a phase I/II study for treating certain patients with chronic myeloid leukemia (CML).

Per the company, TERN-701 has shown promising results so far, with encouraging major and deep molecular response rates by week 24 in clinical studies. Based on this early data, management believes that, if successfully developed, TERN-701 could offer a differentiated treatment option for certain patients with CML.

TERN-701 has received an Orphan Drug designation from the FDA for treating CML.

The acquisition is expected to be closed in the second quarter of 2026, subject to customary closing conditions. It is likely to further strengthen and diversify MRK’s oncology pipeline.

The deal is expected to lead to a charge of around $5.8 billion, or roughly $2.35 per share, which will be reflected in Merck’s second-quarter and full-year 2026 GAAP and non-GAAP results.

MRK Eyes M&A Deal to Offset Keytruda’s Upcoming LOE

Merck has been on an acquisition spree in recent times, as it faces looming patent expiration of its blockbuster drug, PD-L1 inhibitor Keytruda, in 2028. Keytruda accounts for more than 50% of the company’s pharmaceutical sales.

Merck acquired Cidara Therapeutics for $9.2 billion in January 2026. The acquisition added CDTX’s lead pipeline candidate, CD388, a first-in-class long-acting, strain-agnostic antiviral agent, currently being evaluated in late-stage studies for the prevention of seasonal influenza in individuals at higher risk of complications.

Last year, Merck acquired Verona Pharma for around $10 billion, which added the latter’s lead drug Ohtuvayre, a novel, first-in-class maintenance treatment for chronic obstructive pulmonary disease, with multibillion-dollar commercial potential. Ohtuvayre's commercial launch is off to a solid start, backed by strong growth in new patient starts and total patients treated.

Merck believes new products like Ohtuvayre could drive long-term growth and help offset the revenue gap expected from Keytruda’s upcoming loss of exclusivity in 2028. Merck acquired cancer biotech, Harpoon Therapeutics, in 2024.

MRK & TERN’s Zacks Rank

Merck currently carries a Zacks Rank #3 (Hold), while Terns has a Zacks Rank #2 (Buy).

Key Pick

A top-ranked stock in the biotech sector is Amarin AMRN, carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, estimates for Amarin’s 2026 loss per share have narrowed from $7.32 to $6.36, while the same for 2027 have narrowed from $5.97 to $4.64. AMRN shares have risen 5.2% in the year-to-date period.

Amarin’s earnings beat estimates in three of the trailing four quarters and missed on the remaining occasion, with the average surprise being 51.29%.

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This article originally published on Zacks Investment Research (zacks.com).

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